Getting Private Use Adjustments Right – A Practical Guide for Business Owners

At Dafferns, we’re always looking out for ways to help our clients stay ahead of HMRC’s evolving expectations. One area that’s come under increased scrutiny is private use (PU) adjustments – a common feature in small business tax returns, but one that’s often misunderstood or misapplied.

Why it matters

HMRC recently ran a campaign targeting PU adjustments in Income Tax Self Assessment (ITSA) returns. The results were eye-opening: over £27 million in additional tax was recovered, and many taxpayers were found to be incorrectly claiming business expenses that included private use.

This has prompted HMRC to launch a wider digital campaign, encouraging more accurate reporting and increasing the likelihood of enquiries into business expense claims.

What you need to know

If you’re a sole trader or partner in a partnership, and you use assets or services for both business and personal purposes – think mobile phones, vehicles, or home office space – you need to make a private use adjustment. This means:

• Only claiming the business portion of the expense
• Apportioning costs accurately based on actual usage
• Reviewing this annually, as usage can change year to year

Professional standards matter

As tax advisers, we follow the Professional Conduct in Relation to Taxation (PCRT) guidelines, which set out clear expectations around accuracy, disclosure, and client care. If you’re unsure whether your PU adjustments are correct, we’re here to help you review and, if necessary, make disclosures to HMRC.

What you can do now

• Review your expense claims for any items with mixed use
• Keep clear records of how assets are used
• Speak to your adviser if you’re unsure about apportionment

Getting PU adjustments right isn’t just about ticking boxes – it’s about protecting your business, avoiding unnecessary HMRC enquiries, and ensuring your tax returns reflect reality.

If you’d like help reviewing your PU adjustments or want to discuss how this might affect your next tax return, get in touch with your Dafferns Client Manager.